Urbanhire Revenue & Valuation (2018)

hello everyone my guest today is nathan camstra he's the co-founder and cio of a company called urbanhire.com nathan are you ready to take us to the top i am all right man tell us what the company does and what the revenue model is is it a peer play sas company yeah so urban hire at the moment is a um as a recruitment site focused on final funnel recruitment so rather than finding individual people matching to company needs they'll find a lot of people and funnel them down into um something that's a little bit more manageable for for bulk hiring okay and give me give me a use case where someone would be bulk hiring versus like high touch you know super curated yeah so uh bank tellers for instance you know you know you're going to have a certain amount of attrition at a bank uh and you want to make sure that you've got enough people human resources to to actually keep that covered and so you will probably have goals you know x amount for the per year and you'll just keep that in play all year round as you go through that typical amount of nutrition okay so when you look at your average customer paying you i mean how many jobs are they are they hiring through your system per year would you say you know it varies but uh you know i think a good example is you know around a hundred okay so it's pretty high volume yeah and what do they and again what's the revenue model so how are they paying for this you know typical kind of recruiter as you're paying a percent our first year salary some people are now doing sas what's your model yeah so this is uh it's it's a sas play for sure but um it's it's a bit of a subscription as well and then there are things like um assessments that can be added on as extras okay so what's the average customer pay for you per year for this kind of thing would you say yeah i mean that really varies greatly as well but um you know we've got we've got clients that pay you know upwards of ten thousand dollars we've got clients that pay as low as a hundred dollars we have three three thousand six hundred clients on the system not all of those are paying clients how many are paying so we've got 168 i think paying clients okay but in order for us to get um you know attraction as well as bring on people uh we open the system there's an aspect of the system that is is free and available to to anyone to use okay well i mean talk to me about what i know you have many different cohorts i don't want to talk about every customer cohort i mean would you say it's fair to say how the average customer maybe pays you a grand per year for these 100 hires or where would you say i mean it it definitely there's a huge curve right i totally get that yeah um so i i think the grand is probably a good a good use but you know that that's the model as it is i would really like to talk about those where we're going and why i'm actually part of the group now yeah nathan i wanted by the way i want to talk about where you're going but we first have established where you currently are right so that's what i'm trying to do in the first five minutes here so so just to be clear if someone's gonna if someone listening right now you know someone who runs a bank you know a company or someone who runs a restaurant that has high turnover wants to use you and they're going to end up making 100 hires over the next 12 months you're saying they're probably going to pay about a grand to make those 100 hires over the next year yeah and really the services that you have the different aspects of services that you have like assessments how complicated those assessments are you know what type of high touch do you really need okay so if a thousand bucks kind of per year is on the average and you got 168 right now i mean you guys are doing what a couple you know 14 000 ish per month something like that right now no actually we are at about we're by the end of the year we will be closing about a hundred thousand per month okay and what are you at today uh i i believe vincent would have been better for this one but i believe we're at around 69 okay okay got it so you're you know we've got about 35 40 days left kind of in the year so you're assuming that you're gonna get i mean if you're at 70 today you're assuming you're going to double over the next 40 days yeah we're on track to um to close business so it's it's a cyclical business um you know we've got uh clients that come in during cycles and you'll see that the the revenue growth if you look at the chart it you know it drops off at certain parts of the year and then goes goes back up at others when you look at okay so to avoid that seasonality if we just look at year by year growth if you're at 70 grand today per month where were you a year ago november 2017 [Music] uh a year ago i think it was less than 25 000. okay good so so good growth okay good so so this is helpful to understand kind of where the company is today again 168 customers last year about 25 grand per month and now today about 70 grand per month hoping to double that over the next 45-50 days because you close a lot of business in the last quarter it sounds like um and put this on a timeline for us when did you guys launch the company uh they launched it in 2016. okay you said they launched it so when did you join so i i joined this year okay to take the company in a new direction and and are you i mean are you generally viewed as a fountain like how many people are on the team are you viewed as a founder i'm viewed as a founder um there are you know the company consists of 40 people at the moment okay uh we'll probably get to 50 by early next year okay and and what prompted kind of them saying hey we need to bring a guy like nathan in well so a couple things one is that you know the company's growing everybody's very excited about the growth but we wanted to take a look and see what what can we what can we do this to make this a billion dollar company yeah what can we really do to get more investment to make this this huge and um you know was it focus on recruitment make more features in the recruitment space or do we need to take a wider look and see in the hr space how how we can invest in order to to make this a much larger company mm-hmm i show you bootstrap today or if you raise capital so we at this point we've raised capital we we've had um a seat round so how much have you raised today total so as of today i want to say that they raised 125 oh i'm sorry one point yeah 1.2 million okay and most that was equity or convertible note or debt that was equity there's a few different um few different investors including kk funds out of uh out of singapore okay and where are you guys all based by the team of 40. oh it's all all indonesia okay very good yeah you as well yeah that's great okay so now that we have a baseline kind of where you're at today to help us understand where you're going yeah yeah absolutely so i had 17 plus years at aeon um building hris platforms uh so us-based large-scale to global large-scale hris platforms that included broken um you know benefits administration just basic hrms and so i left a on this let's see last year and and really did some soul searching to see what i wanted to where i wanted to go next what i wanted to do and ultimately i had a lot of things my in my the last job i i was asked to really think beyond our current revenue models and find out how we could even disrupt some of the revenue models that we traditionally relied on for a very long time and um you know because companies at this point you know especially you know companies as large as and they're they they're they're in a buy mode they're not going to build something i was a little bit concerned that if i went back into the industry in the large scale company that i wasn't going to be able to achieve some of the software goals that ultimately i wanted to achieve some of the changes to the broking industry and the um in the hrs industry so what i did is focus on finding a platform which had uh uh which had an end of a baseline and was in the hr tag field that could then be converted into um you know what my what my vision is so i met benson and he had the same benson's the ceo benson is the ceo and um so we you know we talked over about eight months and i came out i assessed the platform and so we came to a conclusion that from the platform we've got we can now build this into a a really large scale but focused on indonesia at the moment hrs platform that would be benefits delivery with a um you know would be a sas model but at the same time there's a huge potential for broking revenue out of that model as well okay all year 70 grand per month today is sas revenue though correct correct yeah okay and and i mean how sticky is this so what does churn look like today well that's that's it's difficult because we sign up clients for you know for a year at a time yeah so then you say okay how many were new at the end of the year if only one were news out of 100 you have 99 churn yeah i mean it's very high right now how high to be honest they don't have that number nine what's it what's it definitely above would you say definitely above 80 okay wow that's a really high churn why is it so high if people use you one year and higher 100 people why would they ever let you go why is it so high or why is it so low no no that's really 80 percent churn is really really high annual churn so why is it so high if people are hiring 100 people through you every year why are they churning 20 20 church sorry i was looking at the wrong side of that you've got 80 retention 20 churn yeah got it okay so tell me okay so not as much but tell me why 20 churn why are they leaving um you know i i i don't have specifics that because i'm not really focused on the um the recruitment side at the moment but they you know i would i would guess that it's probably that you know maybe they just don't need next year the same amount of recruitment it's maybe they they had a huge need at the beginning let's say a company's just getting started um they hire a lot of people so there's probably a number of scenarios that would um that would you know make them but maybe they maybe wasn't successful for them and i'm not exactly sure why uh at this point benson could probably give you a better answer on that one well nathan sorry so help me understand the sense i got was you're kind of focused on taking the product in a new direction and so for you to know which way to take the products build a billion dollar company you gotta understand like really understand the current use cases and why people stick and why they churn is that is that what you're focused on no so what i'm what i'm really focused on is looking at the technology and effectively coming up with a plan on how we could build out the rest of what we need to turn it into a larger hrs platform okay is it was it a good place to start on that understanding why people stick and why they churn uh yeah but i think the reason why people stick and churn based on the the hr side isn't necessarily applicable to the rest of the hris i think there's what do you mean by that sorry i don't know i don't understand those acronyms okay so it's a human resource platform basically so if you think of uh think of the application of hris um you you would have different components one of them would be recruitment but you would also have different components like you know employee management benefits administration broking administration so if you think about the you know the recruitment as just a small piece of that larger platform you're going to have different you're going to have a different customer that's going to look for different the other components or all the components um in a larger platform so if we just look at the the recruitment piece it's not going to give us a good formula on on what stickiness return is going to be for the rest of the platform for that what we're doing is just really looking at the industry as a whole and seeing where we can better fit um our software especially for indonesia the thing about indonesia right now is it's just it's just becoming a mature market it's it's not there yet so are you just i don't understand so are you are you going out and building out other pieces of what you kind of put under hr tech and or are you picking a different sector entirely and focusing like 100 on that like benefits management well so both right so we're building different components but you know our focus we're going to change the revenue model from sas to one of broken revenue um and therefore we need to build out a broken component of benefits administration and again focus very specifically on indonesia and and so help me understand how this brokering model obviously we're talking hypothetically here would work someone hires you use your platform and hire someone in indonesia they pay 20 grand per year what do you take of that well so what really the way this works is that you would i you know we build out a platform we effectively give the platform away for free as long as we're getting the broken revenue so we we essentially take your benefits go go broker them through insurance companies find the best fit for you and then administer either a very low or no cost and the reason that's important is because in a lot of cases these companies you know an hrs platform can be extremely expensive and very difficult to implement and so mid-sized companies are going to be challenged to to to do that and then large-scale companies are going to spend a lot of money and implementation uh effectively trying to make it um built for them indonesia does not have a great set of resources to do this because the insurance market's really immature here so nathan just to be clear i mean you're basically repositioning yourself to be a super affiliate to insurance brokers yes and so he would be an insurance broker he would actually be the broker he would actually be the broker yeah yeah yeah interesting so you're essentially going to be an insurance broker with a small tech component well yes exactly i mean i don't think of it as small but very low but yeah well and so why go into this space i mean you look at companies like gusto you know they have a massive lead in this space maybe they're not in indonesia yet but i mean you also then look at just the recruiting side you have indeed isims i mean these huge companies um why go why pivot from you know just a kind of a job placement model to the insurance broker model why do you think you'll be able to build a billion dollar company there versus where you're at today well i think for for a couple reasons one is that asia is as not well represented in terms of uh configuration so the thing about these platforms is they're highly they're they're very much dictated by local regulation and and therefore every company is going to have its own special needs its phone special configurations and its own implementation skills so indonesia has not been represented in in in this platform space so gusto gusto doesn't serve as indonesian companies no and why not well one because the insurance market has not there because there's two approaches you can take and what i've decided that we should do is focus on the market that's about to be mature and then go after the other markets as opposed to what most people have done which is focus on the more mature markets and then try to go into the other regions when it makes sense yeah very good all right man let's wrap up here with the famous five number one nathan what is your favorite business book my favorite business book um uh or the last book you read uh if there's not one just say none none all right number two is there a ceo you're following or studying right now um no no no number three uh what's your favorite online tool for building the company my favorite one at the moment is uh actually i'm using kentico a lot i don't know if you've heard of that yep they came on the show great great company number four how many hours of sleep to get every night um i'm on about four every night at this point that's crazy how old are you i'm 42. and what's your situation married single kiddos are the worst okay no kids okay well i've got yeah two kids sorry two kiddos 42 all right and last question here what do you wish your 20 year old self knew gosh um what i wish my 20 year old self knew is that everything would work out will work out you don't have to worry 20 years into the future guys everything will work out urban higher founded back in 2016 really helping with job payment placement start off as a sas model has have 3 600 users about 168 are paying call it a grand or around that per year so they're doing about 70 grand per month right now that's up from 25 grand a month just a year ago so good growth but they're shutting down this model even though it's got 80 retention and 20 revenue churn per year and really pivoting to be you know dedicated to indonesian ceos and companies really as a super insurance actual broker with a large tech component nathan thank you for taking us to the top thanks a lot